FEDERAL ELECTION COMMISSION

1050 FIRST STREET, N.E.

WASHINGTON, D.C. 20463

BEFORE THE FEDERAL ELECTION COMMISSION

In the Matter of ) 

 ) 

Mark Takai for Congress and Dylan ) MUR 7310

 Beesley in his official capacity as ) 

 treasurer ) 

Dylan Beesley ) 

Lanakila Strategies, LLC ) 

 

STATEMENT OF REASONS OF CHAIRMAN ALLEN J. DICKERSON

AND COMMISSIONERS SEAN J. COOKSEY AND JAMES E. “TREY” TRAINOR, III

This matter arose from a Complaint alleging that Mark Takai for Congress and 

Dylan Beesley in his official capacity as treasurer (“the Committee”), and Beesley and 

his consulting firm Lanakila Strategies, LLC (“Lanakila”) converted campaign funds 

to personal use in violation of the Federal Election Campaign Act of 1971(“FECA” or 

“the Act”). 

On June 4, 2019, the Commission found reason to believe that Respondents 

violated 52 U.S.C. § 30114(b) when Lanakila continued to receive payments for 

consulting services after Takai’s withdrawal from the 2016 congressional election and

subsequent death, and the Office of General Counsel (“OGC”) opened an 

investigation. After its investigation, OGC recommended that the Commission find 

probable cause to believe that Respondents converted campaign funds to personal 

use. OGC concluded that, although Lanakila provided bona fide services to the 

Committee under flat-rate contracts between February 2016 and April 2018, the

negotiated fee for those services was too high from March 2017 until December 2017. 

The Commission has not, however, promulgated any rules governing permissible 

use of campaign funds to wind down a campaign after a candidate withdraws from a 

race or dies (despite receiving a rulemaking petition that presented an opportunity 

to do so). Moreover, the Commission has neither the authority nor the expertise to 

second-guess the terms of the arm’s-length contract for bona fide services that 

Respondents negotiated. Accordingly, we declined to find probable cause to believe 

that the Committee and Lanakila violated 52 U.S.C. § 30114(b) by converting 

campaign funds to personal use. 

MUR731000318
MUR 7310 (Mark Takai for Congress, et al.) 

Statement of Reasons

Page 2 of 8 

I. FACTUAL BACKGROUND

Congressman Mark Takai represented Hawai’i’s First Congressional District 

beginning in 2014 and indicated that he would seek re-election in 2016.1 In February 

2016, the Committee and Lanakila entered into a contract for Lanakila to provide

political consulting services to the Committee in exchange for monthly installment 

payments of $4,000 (upon signing the contract in February, and in March and April

of 2016) and $5,500 (in May and June of 2016).2 By its terms, the contract terminated 

on June 30, 2016.3

In May 2016, Congressman Takai announced that he would not seek re-election 

due to serious illness, and on June 2, 2016, he filed paperwork with the Commission 

indicating that he was no longer a candidate.4 In June 2016, Lanakila and the 

Committee amended their contract to make Lanakila responsible for the Committee’s 

wind-down, maintain the existing monthly payment for services of $5,500

indefinitely, and extend the contract term until terminated by either party.5

Lanakila began work on the Committee’s wind-down that month. These services—

which Beesley provided—involved various tasks over the course of months, including

terminating or renegotiating vendor and lease agreements, refunding contributions, 

communicating with contributors, managing Congressman Takai’s leadership PAC 

until its termination, managing the disposition of the Committee’s assets, completing 

tax documents, corresponding on the Committee’s behalf, paying bills, and 

maintaining records.6 In September 2016, at the request of Congressman Takai’s 

1 See 1st Gen’l Counsel’s Rep’t at 2-3. 

2 Joint Production at 00018-24; see also 1st Gen’l Counsel’s Rep’t at 3.

3 Joint Production at 00018-24. 

4 1st Gen’l Counsel’s Rep’t at 3 & n.12. 

5 Joint Production at 00026-28; see also 1st Gen’l Counsel’s Rep’t at 3-4. 

6 For a few examples, see, e.g., Joint Production at 00570-72, 00590-93 (June 2016 wind-down 

updates to Congressman & Mrs. Takai); 02400 (November 2016 emails re: Form 1099s); 02403 

(November 2016 letter re: contribution refund); 03878 (September 2016 letter to another campaign re:

in-kind donation); 02411 (November & December 2016 emails re: leadership PAC); 02422-25 (emails 

with vendors re: pricing and payment); 03335 (April 2017 emails re: compliance); 03337 (April 2017 

emails regarding “Q1 FEC report”); 03354-55 (April 2017 emails with Sami Takai re: vendor invoice); 

03402-04 (January 2018 letters re: refunds); 03407-09 (April 2018 letters re: refunds). 

MUR731000319
MUR 7310 (Mark Takai for Congress, et al.) 

Statement of Reasons

Page 3 of 8 

widow, Sami, Beesley also agreed to take on the role of Committee treasurer with no 

increase in the monthly compensation he received via Lanakila.7

The record indicates that Lanakila and Beesley attentively performed these winddown and Committee treasurer services, promptly advised Congressman and Mrs. 

Takai of developments, and encouraged Mrs. Takai to dispose of Committee assets

and terminate the Committee after her husband’s passing.8 The Committee 

continued to pay Lanakila the contracted-for monthly payments through January 

2018, and the monthly fee was renegotiated to $750 for February, March, and April 

2018, when Respondents apparently terminated their contract.9 In a March 18, 2018

email, Beesley indicated a preference “not to take anything” for Lanakila’s services

at that point, but stated that the “FEC says the campaign has to pay me at fair 

market value.”10 

II. LEGAL FRAMEWORK

The Act prohibits conversion of candidate contributions to personal use.11 The rule

is permissive: funds in a campaign account may be used for “any [] lawful purpose, 

unless such use is personal use.”12 The Act and Commission regulations identify

certain expenses as per se personal use,13 and require the Commission to “determine, 

on a case-by-case basis, whether other uses of funds in a campaign account fulfill a 

commitment, obligation or expense that would exist irrespective of the candidate’s 

campaign or duties as a Federal officeholder, and therefore are personal use.”14 It is 

the Commission’s “long-standing opinion that candidates have wide discretion over 

the use of campaign funds. If the candidate can reasonably show that the expenses 

7 See Committee Resp. at 2 & n.11 (citing Mark Takai for Congress, Amended Statement of 

Organization, https://docquery.fec.gov/pdf/784/201609089030751784/201609089030751784.pdf). 

8 See generally Joint Production; see also supra n.6. 

9 See Joint Production at 004105-07; 004085-89; 03440 (Feb. & Mar. 2018); 03781 (Apr. 2018).

10 Joint Production at 004085; 40106. 

11 52 U.S.C. § 30114(b).

12 11 C.F.R. § 113.2(e); see also 52 U.S.C. § 30114(a)(6). 

13 52 U.S.C. § 30114(b)(2); 11 C.F.R § 113.1(g)(1)(i). 

14 11 C.F.R § 113.1(g)(1)(ii); see also 52 U.S.C. § 30114(b)(2) (“a contribution or donation shall be 

considered to be converted to personal use if the contribution or amount is used to fulfill any 

commitment, obligation, or expense of a person that would exist irrespective of the candidate’s election 

campaign or individual’s duties as a holder of Federal office, including . . . .”) (listing examples). 

MUR731000320
MUR 7310 (Mark Takai for Congress, et al.) 

Statement of Reasons

Page 4 of 8 

at issue resulted from campaign or officeholder activities, the Commission will not 

consider the use to be personal use.”15

Neither the Act nor our regulations place conditions on the reasonableness of a 

political consulting fee, except that an in-kind contribution can result when providing 

services for less than the usual and normal charge.16 And, though Commission

regulations specify that campaign funds may be used for “winding down the office of 

a former Federal officeholder for a period of 6 months after he or she leaves office,” 

they place no similar presumptive timeframe on the use of campaign funds to wind

down a campaign.17 Because the Act and regulations are silent as to use of campaign 

funds for winding down a campaign, the default rule applies: funds in a campaign 

account may be used for “any [] lawful purpose, unless such use is personal use”18 – 

meaning, on these facts, that the funds are used to “fulfill a commitment, obligation 

or expense that would exist irrespective of the candidate’s campaign.”19 

Commission enforcement practice confirms that, in assessing whether campaign 

funds have been converted to personal use, we look to whether there was a bona fide, 

commercially reasonable relationship. For instance, MUR 6275 considered an 

allegation that a former Congressman violated 52 U.S.C. § 30114(b) by paying a 

former chief of staff $40,000 for campaign-management services.20 In dismissing the 

allegation, the Commission noted that “Committees and candidates have latitude to 

retain services and compensate staff within commercially reasonable bounds,” and 

stated that the record “suggests that at least some portion of the payment was 

legitimate compensation for [the chief of staff’s] work on the campaign.”21 The 

15 Expenditures; Reports by Political Committees; Personal Use of Campaign Funds, 60 Fed. Reg. 

7,862, 7,867 (Feb. 9, 1995). 

16 11 C.F.R. §§ 100.52(d), 100.54.

17 Id. § 113.2(a)(2). See also Expenditures; Reports by Political Committees; Personal Use of 

Campaign Funds, 60 Fed. Reg. 7,862, 7,867 (“It should also be noted that, as written, this [six-month] 

provision acts as a safe harbor. It does not preclude a former officeholder who can demonstrate that 

he or she has incurred ordinary and necessary winding down expenses more than six months after 

leaving office from using campaign funds to pay those expenses.”).

18 11 C.F.R. § 113.2(e); see also 52 U.S.C. § 30114(a)(6). 

19 11 C.F.R. § 113.1(g); see also 52 U.S.C. § 30114(b)(2).

20 See Factual & Legal Analysis, MUR 6275 (Massa for Congress).

21 Id. at 3. There was also ongoing litigation regarding the value of the services. Id.

MUR731000321
MUR 7310 (Mark Takai for Congress, et al.) 

Statement of Reasons

Page 5 of 8 

Commission has reached similar results in cases involving potential per se personal 

use, which is not at issue here.22

III. ANALYSIS

Because payments to political consulting vendors are not per se personal use,23

the question is whether the Committee’s payments to Lanakila “would exist 

irrespective of the candidate’s campaign.”24 The answer is “no.” Plainly, the contract 

between the Committee and Lanakila would not exist, and Beesley and Lanakila 

would not have provided the services at issue, absent Congressman Takai’s 2016 

candidacy for Congress. Nevertheless, based on its conclusion that the work required

to fulfill the contract lessened after March 15, 2017, OGC proposed finding probable 

cause to believe that the Committee’s payments to Lanakila after that date “were 

partially converted to personal use.”25 We reject this enforcement theory for several 

reasons. 

First, this theory is not well supported by the Act. As already noted, there is no 

dispute as to the propriety of the contract between the Committee and Lanakila. 

While OGC focuses heavily on the law governing personal use, it says little of the 

underlying statutory command that campaign funds may be used for “any [] lawful 

purpose.”26 That is the permissive baseline against which the personal use 

prohibition functions. OGC does not persuade us that an entirely lawful contract, 

agreed to by extant parties, negotiated with knowledge of Congressman Takai’s 

condition, ratified after he had withdrawn from his race for reelection, and drafted 

for the express purpose of managing the Committee’s wind-down, reflects an 

“obligation...that would exist irrespective of the candidate’s election campaign.”27

Second, OGC’s theory would require us to establish—in an enforcement matter—

a rule for the use of campaign funds to wind down a campaign, despite the 

22 See, e.g., Factual & Legal Analysis, MUR 6864 (Ruiz III for Congress, et al.) at 2, 5 (finding no 

reason to believe that funds were converted to personal use where a candidate’s wife was allegedly

“overpaid for managing a virtually nonexistent campaign,” and there was evidence the wife “provided 

bona fide services to the campaign;” noting that “[e]ven a virtually ‘nonexistent’ campaign would 

require continued compliance services in advance of termination.”).

23 See 52 U.S.C. § 30114(b)(2); 11 C.F.R § 113.1(g).

24 Id.

25 See Gen’l Counsel’s Br. at 21 (capitalization altered).

26 11 C.F.R. § 113.2(e); see also 52 U.S.C. § 30114(a)(6).

27 52 U.S.C. § 30114(b)(2); see also 11 C.F.R § 113.1(g).

MUR731000322
MUR 7310 (Mark Takai for Congress, et al.) 

Statement of Reasons

Page 6 of 8 

Commission’s declination to conduct a rulemaking on that very subject. As 

Complainant, Respondents, and OGC all note,28 Commission regulations expressly 

contemplate the use of campaign funds for “winding down the office of a former 

Federal officeholder,”29 but are silent as to how campaign funds may be used to wind

down the campaign of a former candidate (particularly when a candidate withdraws 

from a race or passes away during their candidacy). The Commission has had an 

opportunity to do so. In fact, the Commission received a petition for rulemaking that 

mentioned Congressman Takai’s situation in particular.30 But the Commission has

not, thus far, adopted a rule to govern these circumstances. We will not do through 

enforcement what the Commission has declined to do by rulemaking, not least 

because we are prohibited from doing so by law.31

 

Third, OGC’s enforcement theory would require us to second-guess the 

reasonableness of prices negotiated at arm’s length for bona fide services that were 

indisputably provided. As noted above, we have historically declined to undertake 

such inquiries32—for good reason, as this is a task that the Commission is neither 

authorized nor qualified to perform. Market participants are better-suited than 

administrative regulators to value campaign services. 

OGC’s suggestion that we rewrite a duly negotiated contract illustrates how illequipped we are to do that very thing. OGC reasons that because (1) the Committee 

and Lanakila agreed on a $750 monthly rate for February, March, and April of 2018,33

and (2) Lanakila’s work for the Committee generally became lighter beginning in 

March 2017, then (3) $750 is an appropriate rate to impose on the parties post hoc for 

28 See Compl. ⁋ 25; Committee Resp. at 3; Lanakila Resp. at 2; Gen’l Counsel’s Br. at 17-18.

29 11 C.F.R. § 113.2(a)(2).

30 See Letter from Campaign Legal Center to Federal Election Commission, Re: Petition for 

Rulemaking to Revise and Amend Regulations Relating to Former Candidate’s Personal Use of 

Campaign Funds at 2, 6 (Feb. 5, 2018), available at https://campaignlegal.org/sites/default/files/02-

05-18%20CLC%20Former%20Member%20Personal%20Use%20petition.pdf; Rulemaking Petition: 

Former Candidates’ Personal Use, 83 Fed. Reg. 12,283 (Mar. 21, 2018) (providing notice of rulemaking 

petition asking “the Commission to identify the ‘permissible and impermissible uses of campaign funds 

for an individual who is no longer a candidate or officeholder.’”). The Commission has not promulgated 

new rules in response to this petition.

31 See 52 U.S.C. § 30111(d)(1), (4) (providing for congressional review when Commission 

“prescribe[s]” a “rule of law,” including by regulation).

32 See, e.g., supra nn. 20-22. 

33 See 2nd Gen’l Counsel’s Br. at 18.

MUR731000323
MUR 7310 (Mark Takai for Congress, et al.) 

Statement of Reasons

Page 7 of 8 

nine other months of services.34 Yet, OGC has no quarrel with leaving the $5,5000 

negotiated rate in place for the rest of the contract term. We simply have no workable 

standard for reaching this conclusion. After all, the record is clear that workload 

varied across the entire contract term. Why would we respect the parties’ agreement 

for one part of that term, but presume to know better and set it aside for another? 

OGC’s proposal also ignores the fact that monthly fixed-rate contracts, by their 

very nature, contemplate that work will be heavier in some months and lighter in 

others, while payment will remain constant. If the parties wanted to contract for 

services on another basis (hourly, for example), they were free to do so. But they did 

not, likely reflecting their mutual agreement that a fixed-rate contract eliminated 

significant risk of dramatic variations in the payment due for any given month. 

Similarly, the Committee and Lanakila remained at liberty to alter the terms of their 

contract (which they did) or terminate it altogether at any time. We are unable to 

second-guess Respondents’ decisions in this regard.

Similarly, taking it upon ourselves to re-price lawfully negotiated contracts 

creates competing hazards of liability for market participants. Political committees 

(and their vendors and consultants) already must be vigilant to avoid contracting for

goods or services at prices that are too low, lest they be subject to Commission 

enforcement for an impermissible contribution. (In fact, there is indication that this 

consideration guided Beesley’s conduct here.)35 OGC’s enforcement theory would thus 

create a trap whereby market participants could justly fear hyper-policing of whether 

they are paying either too much or too little for services. We are campaign finance 

regulators, not market economists, and we frankly lack the ability to measure with 

such granularity. Moreover, enforcement on this novel theory would muddy the legal 

waters, unsettle expectations, and sow confusion among campaign participants 

seeking, in good faith, to exercise their constitutional right to engage with the 

electorate. 

34 Gen’l Counsel’s Br. at 23-27; Gen’l Counsel’s Mem. to Comm’n Re: Proposed Probable Cause 

Conciliation Agreement at 2 (May 16, 2022).

35 Supra n.10 and accompanying text.

MUR731000324
MUR 7310 (Mark Takai for Congress, et al.) 

Statement of Reasons

Page 8 of 8 

IV. CONCLUSION

The Commission has consistently declined to second-guess what candidates and 

campaigns decide to pay their vendors and consultants—especially in the context of 

arm’s-length contracts for bona fide services. Absent a relevant regulation, our 

inquiry in this context is limited to whether there is a commercially reasonable 

relationship between the parties. We are satisfied of that here. Moreover, to proceed 

with enforcement on these facts would risk exceeding our authority, contravening the 

rulemaking process, and assuming an unauthorized price-setting role for which we 

are entirely ill-equipped. We decline to do so and, accordingly, declined to find

probable cause to believe that Respondents violated 52 U.S.C. § 30114(b) by 

converting campaign funds to personal use.

July 5, 2022

Date

___________________________ 

Allen Dickerson

Chairman

July 5, 2022

Date

___________________________ 

Sean J. Cooksey

Commissioner 

July 5, 2022

Date

___________________________ 

James E. “Trey” Trainor, III

Commissioner 

MUR731000325